Foreign investors take over Canadian debt: StatsCan
In particular, investors added $ 12.6 billion in government bonds in August and $ 13.1 billion in corporate debt.
They also bought $ 3.3 billion of Canadian stocks during the month, canceling more than the $ 1.2 billion of stocks they sold in July.
According to a report by National Bank Financial Inc., in July and August, foreign investors invested $ 38.3 billion in Canadian debt securities, which could be a mistake.
âThe hindsight, as they say, is 20-20. But at first glance, some of these foreign investors may have bet on the wrong horse, âhe said, as expectations for rate hikes in Canada rose, causing Canadian bonds to underperform by against US Treasuries since the summer.
At the same time, foreign investment in Canadian stocks has been relatively modest, just as Canadian stocks have outperformed US markets.
âSome foreign investors may blame themselves for not gaining more exposure to Canadian equities, as the S&P TSX recently outperformed the S&P 500,â NBF said, noting that the S&P TSX Composite Index had risen by about 1 , 8% since the end of August, while the S&P 500 Composite was down 1.0%.
“This is a trend that we expect to continue, based on the outperformance of Canadian equities during past periods of high inflation,” he said.
Statistics Canada noted that Canadian investors also resumed their purchases of foreign securities in August, adding $ 15.2 billion in the month, after selling for $ 4.7 billion in July.
âInvestment activity in August was almost equally attributable to foreign bonds and foreign stocks,â Statistics Canada reported.
Canadian investors again added $ 9.4 billion of US stocks to their holdings in August, mostly large-cap tech stocks, while continuing to sell non-US foreign stocks. Canadian investors sold other foreign stocks for $ 1.4 billion in August, after a $ 1.6 billion divestment in July.
Besides US stocks, Canadian investors also added $ 7.1 billion in foreign debt securities in August. In the past seven months, investors have added $ 33.6 billion in foreign debt, StatsCan said.
Overall, international transactions in securities generated a net inflow of $ 11.1 billion into the Canadian economy in August, following a net inflow of $ 18.7 billion in July.